Can California Hog the Regulation of North Carolina Pig Farms? | Eastern North Carolina Now | The Supreme Court is mulling whether to allow California, which has virtually no domestic pork industry, to regulate other states’ pig farms

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    Publisher's Note: This post appears here courtesy of the John Locke Foundation. The author of this post is Jon Sanders.

  • The Supreme Court is mulling whether to allow California, which has virtually no domestic pork industry, to regulate other states' pig farms
  • If farms are forced to adopt California's strictures, it would negatively impact their operating costs, create untenable biosecurity risks, and especially harm smaller farms
  • The issue certainly impacts interstate commerce but also the equality and territorial rights of each state

    On October 11, the Supreme Court heard a case that will determine whether California regulators can subject pig farms of North Carolina and elsewhere to their regulatory whims. Should justices allow such an outcome, it would greatly raise costs on hog farms everywhere, and along with that, the price of bacon, ham, pork chops, etc. It would also harm the pork industry in North Carolina, the nation's second-largest pork producer.

    The case is National Pork Producers Council v. Ross, and at issue are the economic effects of the implementation and enforcement of Proposition 12 outside of California, a ballot initiative which passed in 2018. According to Ballotpedia, voters were presented with a measure that would establish "new minimum space requirements for confining veal calves, breeding pigs, and egg-laying hens," prohibit commercial sales of "products derived from animals confined in noncomplying manner," and - importantly - require the "State of California to issue implementing regulations."

    Essentially voters were asked to ratify a vague feeling of more humane treatment of egg-laying hens, veal calves, and breeding pigs, as determined by more space required for them. The details were to be filled in later and enforced by California regulators. Over 7.5 million California voters approved it.

    Regulatory agents of California going farm to farm?

    What does a California ballot initiative have to do with North Carolina hog farms? As constitutional scholar Trevor Burris wrote for Cato Institute, "Prop 12 will have California agricultural agents traveling around the country to ensure that farmers in other states comply with California law." (Apparently California would, for the purpose of sending its agents to harass North Carolina pig farmers, waive its prohibition against state-funded travel to North Carolina.)

    California retailers would be outlawed from selling any pork from producers who don't comply with California's confinement restrictions for sows. California regulators set the standard at 24 square feet of living space, below which they defined as "confined in a cruel manner." Though California accounts for about 15 percent of pork sales in the nation, 99.9 percent of America's breeding sows are from other states. Their regulations, then, would apply almost exclusively to producers in other states. Worse, nearly all producers - 96 percent of American hog farms - currently fall short of California regulators' extreme restrictions.

    Enforcement of California's restrictions poses an expensive, logistical nightmare, owing to the nature of the pork industry. Burris explained:

    The pork industry is a highly integrated interstate market where a pig farmer in North Carolina might sell his stock to a meatpacker in Illinois, who then distributes to California. It's very difficult to trace a given cut of meat back to its source and verify that the farmer complied with California law.

    This high integration would likely make it unworkable - costlier than even renovation or new construction - for North Carolina and other states' pig farmers to avoid the California market and its regulations.*

    In a report furnished to the National Pork Producers Council in May 2021, North Carolina State University economist Barry Goodwin estimated that construction of new facilities to conform with Prop 12-induced regulations would cost large pig farm operations $3,000 per sow (for operations of 5,200 sows). Smaller farms (1,000 sows) would face even higher costs, closer to $3,500 per sow. Construction of a new facility for a farm of 5,200 sows would cost $15.6 million - and these expensive facilities could still be rendered incompatible should California regulators change their restrictions in the future.

    Goodwin forecast that the negative impacts would be worse for small farms than large operations, exacerbating the problem of the concentration of fewer and larger operations in the hog industry.

    To make matters worse, Goodwin wrote that "existing science does not support the intentions of the regulations - hogs will be worse off under the new restrictions." Changing in sow housing could bring stresses, including the stress of mixing animals (common in housing conversion) causing them to "compete for dominance and feed" and likely "negatively impact fertility and embryo survival rates." Others have also noted the subjectivity of the 24 square feet standard.

    Furthermore, unannounced visits by out-of-state inspectors going from farm to farm would violate biosecurity protocols and risk devastating hog populations with disease, including African Swine Fever and Porcine Epidemic Diarrhea virus. As the amici brief from the Iowa and Minnesota pork producers et al. explained,

    Because many viruses can be introduced to a farm by people (either directly or from particles attached to their boots, clothing, or vehicles), most sow farms implement strict biosecurity procedures that restrict visitors and vehicles entering the farm to essential personnel and, even for these people, require that the person have been away from all other swine for at least 24 to 48 hours - and in some cases as much as 72 hours - before entering the farm. These farms also require authorized visitors to shower into and out of the barn, where clothing is provided by the farm (after the shower), and visitors cannot bring any outside supplies or materials (e.g., paper, pens, cameras) into the barn.

    In short, California pork consumers enjoy the benefits of access to a highly integrated, nationwide industry that exists almost entirely outside of their state's borders. Golden State regulators want to force sweeping changes on that industry to adhere to their own subjective whims. These changes, if adopted, would lead to more expensive pork prices, put smaller pig farmers at risk of going out of business, and may actually impose more "cruelty," not less, on U.S. sows.

    A difficult question before the Court?

    The matter obviously impacts interstate commerce. Nevertheless, it presents difficulties. As Burris explained, "Because the Constitution gives Congress power over interstate commerce it is possible for state laws to encroach on Congress's power and to regulate extra‐territorially. This is called the 'dormant' Commerce Clause, and it has long been controversial and conceptually difficult."

    Even so, and even as the libertarian Cato Institute has questioned the powers granted Congress under the Commerce Clause, as have some sitting Justices, Cato filed an amicus brief in support of the National Pork Producers Council (NPPC). The Cato brief explained that "invalidating Proposition 12 under the Dormant Commerce Clause would not implicate the extra-constitutional expansion of the Commerce Clause. The American pork market is truly interstate commerce under a constitutionally faithful meaning of the term."

    The North Carolina Chamber Legal Institute, North Carolina Pork Council, North Carolina Farm Bureau, and similar groups from 11 other states filed an amici brief in support of the NPPC's contention that "California's Proposition 12 violates the dormant Commerce Clause under any sensible interpretation of current jurisprudence." They also acknowledged that "many Justices have expressed concerns, if not outright disapproval, of the Court-created and malleable tests sometimes applied in dormant Commerce Clause cases," but as they noted:

    Such concerns do not justify throwing out the baby with the bathwater, and this case is an excellent vehicle for considering some textual and structural approaches, based on the notion of horizontal federalism, that would provide a more solid basis for rejecting California's extraterritorial regulation of interstate commerce.

    By "horizontal federalism," the North Carolina groups' brief is referring to is the relationship between the states comprising the United States, beginning with "a recognition that States, for constitutional purposes, are equal and territorial" (emphasis in original). Under this recognition, they explained, the right of a state such as North Carolina to regulate its citizens within its territory means other states have the same right. Just as importantly, it means a state such as California has no right to exercise this authority over another state's citizens outside of its territory.

    "Properly understood," their brief stated, "the Constitution forbids any State from doing what California has done here: upending the national economy by attempting to dictate extraterritorial local activities through regulations of interstate commerce."

    Note:

    Goodwin also examined the prospect that some pork producers would avoid the California market. This market bifurcation could lead to higher-priced pork for Californians and lower prices elsewhere. It would also necessitate market segmentation (tracking and segregating pork products from compliant and noncompliant operations, from piglet to pork chop), which would pose severe difficulties and costs given the integration of the pork industry. Goodwin cited previous examples where trying to segment out certain products (such as corn hybrids) from an overall comingled supply brought about significant economic losses to producers as well as companies throughout the marketing chain. Because of that, Goodwin wrote that high market segmentation costs "will likely encourage widespread adoption of [California's] standards as it may be cheaper overall to adopt the new standards for all pork than to maintain separate markets for certified and non-certified pork."


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